Payment Terms

Key Considerations for Improving Your Business Processes and ETRM System Implementation | Timely LLP

Why Systems Can Define Business Processes

A trading and risk management system, like RightAngle for example, can help define business processes and provide better controls. Based on system security roles, there can be a valid segregation of duties that can ensure that invoices are paid correctly. In the payable invoice example, several elements make up the total value (i.e. price, quantity, lead time, payment terms, etc.).

The price can be a fixed price or a formula using a price publication like OPIS or Platts. When using a system, contract details are captured around important elements. If pricing is formula-based, base prices can be interfaced into the system from pricing services such as OPIS and Platts, meaning no human error is involved. manually, it can be entered by a pricing analyst, depending on their security roles in the system.

READ MORE: A Riddle to Solve: The 3 Best Ways to Assess the Suitability of an ETRM for Your Organization

The planner can then enter all relevant movement information, which would then provide the data needed to calculate the total value. From that point, an Accounts Payable Analyst would receive the invoice and use the total value calculated by the system to post the invoice. No manual approval is needed as each step in the process has been completed and the validation is that the invoice amount matches the value calculated by the system.

Examples of how systems implementations can simplify business processes

Several years ago, there was an energy company that was growing through acquisitions. The original entity has acquired other entities twice as large as the original entity. They kept acquiring other entities to the point that it ended up being at least four different entities combined into one company. When this happens, especially if it’s fast, business processes become disjointed. He may end up with one set of assets using one set of business processes and another set of assets using another business process. This situation makes a company’s controls weak and makes it difficult for auditors to perform their duties. This particular energy entity attempted to consolidate all of the combined activities into a trading and planning system that was not sophisticated enough to handle core business functions.

READ MORE: ETRM of the Future

When the time came for this entity to purchase an ETRM system, they recognized that it was an opportunity to clean up their internal business processes. The system they chose was one that was developed for a company that had exceptionally good business processes and controls. The system was designed based on the existing business processes of the original development partner, with some enhancements. The flow through the system made it easier to define new business processes when implementing the new system. The entity that implemented the system has gone through many changes and divestitures, but the original central entity, now another company, still uses that system and business processes.

READ MORE: 10 Ways to Create Layers of New Value Around Your ETRM System

Another good example of how a system can help streamline business processes involves a new start-up business. In the case of a startup, there is no business process. If there is no system implemented, processes can grow organically. When the first contract is issued, they develop this process, and then when they pay their first invoice, they develop this process. As business grows and employees are added, the original processes may not be sufficient for a growing organization. This can present an opportunity to implement a software system and track system flow processes and controls. During implementation, by relying on knowledgeable consultants during system implementation, processes and controls can then be built into the software implementation to streamline business processes.